"What should we do?" this question perhaps best sums up investor sentiment at the moment. The markets are surging . So what should you do?
We present a three-point strategy that will help you tide over these turbulent times and emerge winners.
1. Don't get carried away by the exuberance in the markets
Resist the temptation to get invested and make quick gains. Your risk appetite doesn't change with market conditions. If you were risk-averse before the markets rose, you continue to be so even now.
Volatile times like the present one demand that investors exercise restraint and act in a cautious manner. For those toying with the idea of taking on some additional risk, here's a quick test. Go back in time and recall your reactions on black Monday, that should give you a fair idea of your ability to handle risk. Maintain your asset allocation in tune with your objectives and risk-appetite at all times.
2. Dispose of the deadwood from your portfolio
We all have investments in our portfolios which seem like wrong choices in hindsight. For example a risk-averse investor could hold a sector fund or an aggressive equity fund which is a mismatch in the portfolio.
There is a fair chance that these investments might be in the black, thanks to the rising markets. Now is the time to sell off these holdings and restructure your portfolio. If need be, utilise the services of an investment advisor for the same.
3. Stay invested till better opportunities emerge
Lazy money is never a good idea; your money should be gainfully employed at all times. Instead of languishing funds in bank accounts, look at options like short-tenured fixed deposits or short-term plans offered by income funds depending on your risk profile.
Not only will you earn better returns, your funds can be conveniently transferred to the appropriate investment avenue when the right opportunity emerges.
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